• European equities trade on the front foot following the Senate passage of the debt ceiling bill
• US Senate voted 63-36 to pass the US debt ceiling bill, which sends it to President Biden's desk
• DXY oscillates in a tight range on either side of 103.50 ahead of the US jobs report
• Industrial commodities are boosted by source reports that China is reportedly mulling a property-market support package to bolster the economy
• Looking ahead, highlights include US Labour Market Report, Rating Reviews for Germany, France & UK

2nd June 2023

LOOKING AHEAD

• Highlights include US Labour Market Report, Rating Reviews for Germany, France & UK.
• Click here for the Newsquawk Week Ahead preview.
• Click here for the US Jobs preview.
• Click here for the OPEC+ preview.

US DEBT CEILING

• US Senate voted 63-36 to pass the US debt ceiling bill, which sends it to President Biden's desk.
• US President Biden said he wants to thank Senate leaders Schumer and McConnell for quickly passing the debt ceiling bill and noted that the bipartisan agreement is a big win for the economy, while he looks forward to signing the bill ASAP and directly addressing Americans on Friday. Furthermore, the White House announced that President Biden is to deliver an address on averting a default and the bipartisan budget agreement at 19:00EDT/00:00BST, according to Reuters.

EUROPEAN TRADE

EQUITIES

• European equities trade on the front foot following the Senate passage of the debt ceiling bill. Despite the positivity during today’s session, the negativity earlier in the week means that the Stoxx 600 is on track to close the week out with losses of around 0.8%.
• Equity sectors in Europe are higher across the board (ex-healthcare) with Real Estate names top of the leaderboard followed by Basic Resources and Consumer Products & Services. Luxury names also benefit from gains in the sector overnight.
• US equity futures see gains but to a lesser magnitude compared to European peers ahead of the US jobs report.
• Click here and here for a recap of the main European updates.
• Click here for more detail.

FX

• DXY oscillates in a tight range on either side of 103.50 ahead of the US jobs report, whilst the debt ceiling bill makes its way to President Biden after passing through the Senate.
• Yuan is firmer on reports China is reportedly mulling a property-market support package to bolster the economy as existing policies failed to sustain a rebound.
• Yen saw its revival thwarted by firmer US Treasury yields whilst also taking on board more dovish comments from the BoJ governor,
• Euro and Sterling are flat against the Dollar around 1.0770 and 1.2530 respectively in a quiet morning.
• Aussie outperforms amid a rebound in base metal prices ahead of the RBA policy announcement next week.
• PBoC set USD/CNY mid-point at 7.0939 vs exp. 7.0958 (prev. 7.0965)
• Click here for notable OpEx for the NY Cut.
• Click here for more detail.

FIXED INCOME

• Debt futures are observing caution in the run-up to NFP that crowns a holiday-shortened week.
• Bunds are losing further traction from 136.00 following an opening 136.36 Eurex print.
• Gilts trades around 97.00 and T-note is closer to 114-19+ overnight trough than 114-24+ peak
• Click here for more detail.

COMMODITIES

• WTI and Brent front-month futures are on a firmer footing as the complex holds onto yesterday’s data-driven upside with further tailwinds seen following reports China is looking to further boost its property sector.
• Spot gold is flat around the USD 1,975/oz mark after meeting resistance at its 21 DMA (1,983.77/oz) overnight, with eyes on the US jobs report.
• Base metals are firmer across the board, bolstered by the risk appetite coupled with stimulus hopes from China.
• Click here for more detail.

NOTABLE HEADLINES

• ECB's Panetta said inflation is too high but there is no reason to worry and now is not the time to be too hasty in raising rates, while he is committed to getting back to the 2% target level and said they cannot rule out a technical recession in the Eurozone, according to Le Monde.
• ECB's Vasle said core inflation remains high and persistent - further rate hikes are needed to reach the goal of 2%, and added monetary policy is not enough, other policies need to help.

GEOPOLITICS

• South Korea and the US issued a joint cybersecurity advisory against North Korean hacking group Kimsuky and stated that North Korea is engineering cyberattack campaigns targeting think tanks, academia and news outlets, while South Korea issued new independent sanctions on the North Korean hacking group, according to the South Korean Foreign Ministry cited by Reuters.
• North Korea denounced the US Secretary-General over condemning its satellite launch and said it will continue to exercise its sovereign rights including the military spy satellite launch, according to KCNA.
• UN spokesman is concerned about the continuous slowdown in implementing the Black Sea grain initiative and noted that a slowdown was observed particularly in April and May.
• White House National Security Adviser Sullivan hosted Israel's National Security Advisor and Minister of Strategic Affairs, while the officials continued discussions on enhanced coordination to prevent Iran from acquiring a nuclear weapon, according to Reuters.
• Chinese Eurasian Affairs Envoy said ‘fruitful’ talks on Ukraine may be difficult, according to Reuters.

CRYPTO

• Bitcoin is on a firmer footing back above USD 27k, whilst Ethereum eyes USD 1,900 to the upside.

APAC TRADE

• APAC stocks traded higher as the region took impetus from Wall St where the S&P 500 and Nasdaq climbed to 9-month highs amid debt ceiling optimism, falling labour costs and dovish Fed commentary.
• ASX 200 was positive with the index led higher by the mining sector and after the Australian Fair Work Commission raised the minimum wage by 5.75%, although gains were capped by weakness in financials and after recent upward revisions to banks’ forecasts on the RBA’s peak rate.
• Nikkei 225 was underpinned amid comments from BoJ Governor Ueda who stuck to the dovish script, with SoftBank among the biggest gainers following a buy rating from Jefferies and as the Co. benefits from the recent AI tech bid in the build-up to the ARM IPO.
• Hang Seng and Shanghai Comp. conformed to the broad upbeat mood with Hong Kong significantly outperforming amid a rally in property and tech.

NOTABLE ASIA-PAC HEADLINES

• China is reportedly mulling a property-market support package to bolster the economy, according to Bloomberg sources. Regulators are said to be considering reducing the down payment in some non-core neighbourhoods of major cities, alongside lowering agent commissions on transactions, and further relaxing restrictions for residential purchases under the guidance of the State Council, according to sources. China is working on a new basket of measures to support the property market after existing policies failed to sustain a rebound.
• US President Biden said the US does not seek conflict in competition with China and the countries should work together where they can.
• BoJ Governor Ueda said premature tightening could hurt companies even in good health and may weaken the economy's potential, while he said patiently maintaining easy policy would heighten Japan's potential growth in the long run. Ueda also stated it is not time yet to debate a specific exit strategy including the possible sale of the BoJ's holdings of J-REITs and the BoJ will maintain massive monetary easing as it will take more time to achieve the price target, according to Reuters.